Washington High Court Must Define ‘Collapse’

SEATTLE (CN) – An insurance dispute involving structural damage to a condominium requires the Washington Supreme Court to define the word “collapse,” the 9th Circuit said Tuesday. The dispute stems from an insurance claim that the homeowners’ association of a two-building condo called Queen Anne Park filed with State Farm in 2009 after allegedly finding “several areas of hidden decay.” Saying that the siding on the buildings was leaking, the association claimed that its insurance policy covered “collapse,” which it defined as “a substantial impairment of the structural integrity of any portion or component of the building.” It filed a federal complaint after State Farm performed its own inspections of the condo and denied the claim. In denying the association summary judgment in 2012, U.S. District Judge Thomas Zilly said that courts in Washington had not directly addressed what exactly defines “collapse” for insurance purposes. “Even if Washington were to adopt a relaxed standard that is somewhere short of ‘rubble on the ground,’ it would require an insured seeking coverage under a collapse provision to show, in addition to a substantial impairment of structural integrity, an imminent threat of collapse,” Zilly wrote. Though the judge said that the association could not meet that standard, he did not find in favor of State Farm either because the insurer did not cross-move for judgment regarding the definition of “collapse.” Facing an appeal from the association, a three-judge panel with the 9th Circuit on Tuesday certified the following question to the Washington Supreme Court: “What does ‘collapse’ mean under Washington law in an insurance policy that insures ‘accidental direct physical loss involving collapse,’ subject to the policy’s terms, conditions, exclusions, and other provisions, but does not define ‘collapse,’ except to state that ‘collapse does not include settling, crackling, shrinking, bulging or expansion?'” The panel noted that there is no “clear and controlling Washington precedent” about the coverage of collapse, and that the state Supreme Court’s answer could have “far-reaching effects” on both insured people and businesses. Judges Arthur Alarcon, Wallace Tashima and Mary Murguia sat on the panel.